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Why do students fail their tax exams?

Posted on: Wednesday, October 08, 2014

Since 1999 I’ve been provided tax revision courses for all the main accountancy qualifications including ACA, ACCA and CPA through my business Tax Grinds here in Dublin city centre.

In 2013 the published pass rates were as follows:

• CPA   43% (Advanced Tax)
• ACCA  41% (P6 – Advanced Tax) dropping to 39% in 2014
• ACA  63% (Overall)

Students fail their professional exams for a variety of reasons but the main one is the wrong study technique.

If you’re someone who has always managed to pass your school, college and/or university exams by starting to cram a month or so before the exam, chances are, you probably won’t pass your professional exams with this approach.

Why if cramming has worked so well for you up to now does it rarely if ever work for the professional exams and in particular tax?

The main reasons are:

1. The Tax Syllabus is too broad – In order to really understand tax, you must wade through a considerable amount of case law, legislation and Revenue Practice not to mention practice exam questions.  The exam is structured so you can’t pick and choose which topics to study and which to avoid.  The paper rarely allows for any choice which means if you haven’t done a comprehensive revision of the course you, most likely, won’t be able to answer enough questions to pass the exam.

2. Tax is a dynamic subject – Because tax is amended with every Finance Act, you really need to update your knowledge on a constant basis.  If you’re practicing past exam papers it’s essential that you ensure they’ve been correctly updated to reflect the most recent legislative changes.  This isn’t something that you’ll have time to do the week before the exam.

3. There are so many variables – Because there are so many possible scenarios that could crop up in an exam, you need a very detailed understanding of the subject.  It’s not possible to simply learn off a list of rules because, as we all know, there are so many exceptions and special conditions associated with tax legislation.  In my opinion, practicing exam questions is the best way to test your understanding, build your confidence and hone your time management skills – again, this can’t all be done a week or so before the exam.

4. Tax is very specific – In the past you may have written pages and pages of an answer that got you through the exam.  With tax, the answer must be specific to the requirements of the question. If what you’ve written is not what the Examiner’s looking for then it’s unlikely you’ll pass.

So how does a student ensure he/she passes the tax exams?

1. Read the manual in its entirety along with any suggested supplementary material and make sure you attend the lectures.

2. Practice lots of exam questions under exam conditions.

3. Don’t leave out sections of your manual even if you find them daunting.  If you’re having difficulty with a particular area you should request assistance and guidance from your course provider.

4. Know what’s on your syllabus.  Just because your Lecturer hasn’t covered it doesn’t mean it’s not examinable.

5. Read the Examiners’ Reports published by the Professional Bodies to ensure you know what the Examiner was really looking for and how he/she allocated marks.

6. Plan your exam strategy.  In order to maximize your marks you must answer the majority if not all of the exam paper.  There’s absolutely no point in focusing on one question to the exclusion of another especially if they carry the same marks.

7. Make sure you apply your knowledge to the exam question.  Stick to what you’ve been asked and don’t go off on a tangent.  Structure your answer first because there are no marks awarded for answering a question you weren’t actually asked.

8. Don’t just list facts. By all means outline the conditions of a particular relief but make sure you relate those points to the scenario described in the exam question.  Always ask yourself “why did the Examiner think it relevant to include this information – what do I need to look out for?”  It is important to show the Examiner that you have considered the implications and tax treatment that should apply in the specific situation.

Are there any tips for those students who believe they followed the above rules, have never left studying to the last minute but still failed their tax exams?

1. The main reason why this might happen is if you didn’t completely understand specific areas of legislation.  This often arises if you don’t work in Tax and are not familiar or comfortable reading legislative texts.  To people who work in an unrelated area, tax can seem like an academic subject rather than a series of practical problems that need to be solved.  For this reason, it might be useful to set up a study group where you can analyse and discuss the tax treatment of particular scenarios as opposed to merely focusing your study on isolated sections of tax in your manual.

2. Because tax is explained under individual tax heads in your study material, it can often cause great difficulty for the student to integrate all the relevant taxes in an exam solution.  With every question, look at the parties involved (i.e. who is affected?), identify the transaction (i.e. is it a sale, a gift, a restructuring of share capital, etc.?), select the correct tax treatment (i.e. is it Capital Gains Tax, Stamp Duty, Corporation Tax, etc.?).  Once you’ve done that examine any tax reliefs or exemptions (don’t forget to outline the conditions to ensure all the requirements have been met) as well as any Anti-Avoidance legislation (if it looks to good to be true then it is!).

3. Have you practiced all the exam questions in every past paper, scored high marks in each question yet still failed the actual exam?  Sometimes students complete exam questions so often they almost memorize them as opposed to really understanding how to correctly answer them.  My advice would be to practice exam questions from other professional accountancy and tax bodies, that way you’ll get a different perspective on how to approach exam questions and maybe even a clearer understanding of the examinable tax topics.

4. If you’ve failed your final tax exams more than once, unfortunately, you’re probably starting to doubt your own ability.  It’s very important to stay focused on exam success after all you wouldn’t have got this far if you weren’t well capable of passing.  It is essential that you identify what has let you down in the past and concentrate on avoiding those mistakes in the next sitting.

Very best of luck to everyone sitting their tax exams.


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